Grainne Ryder

October 1, 1999

1

. Norconsult International, Subregional Energy Sector Study for the Greater Mekong Subregion (Manila: Asian Development Bank, October 1995), p. iv; “Financing for Laos’ Nam Theun,” International Water Power & Dam Construction, October 1997; Ian Gill, “Hydropower project to increase Lao PDR’s G.P. by 7 percent,” ADB Review, November/December 1997, pp. 7-8.

2. Christopher Thieme, “Breaking Ground in Laos,” Independent Energy, July/August 1997, pp. 36-38.

3. Statkraft owns and operates more than 80 large dams and reservoirs with a total installed capacity of 9,000 MW, or about one-third of the country’s total hydro capacity. Vattenfall has an installed hydro capacity of about 9,000 MW.

4. Theun-Hinboun financiers: Nordic Hydropower and MDX of Thailand each contributed $22 million in equity capital; the Asian Development Bank provided an interest-free loan of $60 million; the Norwegian Export Credit Agency provided a government-guaranteed loan of $21 million for mechanical equipment and the Norwegian portion of electrical equipment; the Nordic Development Fund provided a government-guaranteed loan of $7.5 million for construction supervision by Nordic Hydropower; the Nordic Investment Bank provided a government-guaranteed loan of $15 million; the Swedish Export Credit Agency provided a government-guaranteed loan of $30 million for the Swedish portion of equipment; the Thai Export-Import Bank provided a $10.7-million loan for the transmission lines; and a consortium of Thai banks provided $63 million. Sources: Memorandum from Kjell Heggelund, Statkraft, Norway, June 10, 1998; http://www.adb.org/Work/Projects/profiles/theunboun/theunhinboun.htm.

5 The estimated revenue of $54 million annually is from Gunnar Wallin of Vattenfall, quoted in Ann Danaiya Usher (ed), Dams as Aid: A political anatomy of Nordic development thinking (London: Routledge, 1997). According to the ADB’s 1994 figures, the dam was expected to generate $68.8 million annually. Asian Development Bank, “Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Lao People’s Democratic Republic for the Theun-Hinboun Hydropower Project,” restricted RRP:LAO 27325, October 6, 1994.

6. “Dr Lars Uno Thulin,” Vientiane Times, April 7-9, 1998.

7. See for example, Oyvind Ulfsby, “Experience from private hydro development,” International Water Power & Dam Construction, April 1998, p. 31; Mike Nash, “A word of advice,” International Water Power & Dam Construction, January 1998, p. 41; Anthony Churchill, “Hydropower: A New Business or an Obsolete Industry?” paper presented to the 27th International Symposium on Hydraulic Engineering, Aachen Germany, January 3-4, 1997; J.G. Warnock, “A developers’ point of view: not for the faint hearted,” from “Financing Hydro Power Projects 94,” proceedings of a conference sponsored by International Water Power & Dam Construction, Frankfurt, Germany, September 22-23, 1994.

8. Somboune Manolom, David Mayo, and Terence C. Muir, “Financing Hydropower Development in the Lao PDR,” in “Financing Hydro Power Projects 1996,” proceedings of a conference sponsored by International Water Power & Dam Construction, London, England, November 25-26, 1996.

9. Norconsult International, 1995, p.593.

10. Citing World Bank figures, Norconsult International estimated in1995 that the Lao government would need about $21 million annually in foreign exchange by 1998, in order to service debts accrued by its utility, Electricité du Laos. Norconsult International, 1995, pp. 490 and 492.

11. In 1994, EGAT was forced by public pressure to provide cash compensation for lost fishing income to thousands of individuals affected by the World Bank-financed Pak Mun dam (136-MW). According to Montri Suwanmontri of EGAT, compensation “significantly affected the investment cost of this project. . . . and would become an important consideration in determining the economic viability of projects in the future.” Montri Suwanmontri, “Environmental Protection and Hydro: Forming a Partnership,” HRW, May 1998.

12. Karl Jechoutek and Ranjit Lamech, “Private Power Financing – From Project Finance to Corporate Finance,” Private Sector, June 1996, p.105.

13. For more details about BOT risk allocation and project documentation see for example, Henri Jacquet-Francillon (Electricité de France) and Joseph Huse (Freshfields), “Financing hydro projects by means of BOT (Build-Operate-Transfer)” in “Financing Hydro Power Projects 1996,” proceedings from a conference sponsored by International Water Power & Dam Construction, London, England, November 25-26, 1996; Norconsult International, 1995, pp. 579-643.

14. Asian Development Bank, 1994.

15. Correspondence from Kjell Heggelund, Statkraft, Norway, to Gráinne Ryder, Probe International, June 1998.

16. Asian Development Bank, 1994, p. 10.

17. Ian Gill, November-December 1997, p. 8. The consortium is led by Bangkok Bank and includes Siam Commercial Bank, Bank of Asia, Siam City Bank, First City Investment, and Union Bank.

18. The terms of the licence agreement are referred to in “Agreement on Environmental Mitigation Measures to be Undertaken and Paid for by the Theun-Hinboun Power Company Ltd.” between the Government of Lao People’s Democratic Republic and Theun-Hinboun Power Company, December 6, 1996.

19. Loan agreement for Theun-Hinboun Hydropower Project between Lao People’s Democratic Republic and Asian Development Bank (LAS: LAO 26306), Article IV, October 1994.

20. Project agreement between Asian Development Bank and Theun-Hinboun Power Company, Schedule 5, Section 4, October 1994.

21. Project agreement, Article II, Section 2.07 b), October 1994.

22. http://www.adb.org/Work/Projects/profiles/theunboun/theunhinboun.htm

23. Norpower (renamed Norconsult International), “Nam Theun ½ Hydropower Project Feasibility Study,” Volume 3, Environmental Impact Assessment Report, May 1993.

24. Asian Development Bank, Loan No. 1329-LAO (SF): Theun-Hinboun Hydropower Project, Special Loan Review Mission, Section V, November 10-21, 1997.

25. Asian Development Bank, “Aide Memoir Special Review Mission Loan No. 1329-LAO (SF): Theun-Hinboun Hydropower Project,” November 18-28, 1998; Bruce Shoemaker, “Trouble on the Theun-Hinboun,” International Rivers Network, Berkeley, April 1998.

26. Ann Danaiya Usher and Gráinne Ryder, “Vattenfall Abroad: Damming the Theun River,” in Ann Danaiya Usher (ed), Dams as Aid: A political anatomy of Nordic development thinking (London: Routledge, 1997), pp. 90-91; see also FIVAS, “More water, more fish?: A report on Norwegian involvement in the Theun-Hinboun Hydropower Project in Lao PDR,” Oslo, 1996.

27. Midas/Burapha Consultants, “Theun-Hinboun Environmental Studies in Lao PDR: Draft Final Report,” Vientiane, June 1995, pp. 9-10.

28. International Rivers Network, “Power Struggle: The Impacts of Hydro-Development in Laos,” Berkeley, February 1999, p.18.

29. “‘Save-the-fishers’ call,” Power in Asia, August 10, 1998; Probe International, “Power company off the hook for fisheries damage in Lao PDR,” press backgrounder, July 28, 1998.

30. Efforts to restore Nordic fisheries have not always been successful. Migratory fish populations have not survived along Sweden’s heavily dammed rivers. Fish ladders and breeding programs were “designed to maintain industrial fisheries in the Baltic Sea, not to compensate local fishers living along the dammed rivers. Moreover, ladders do not work for all species of fish.” Lars Lövgren, “Moratorium in Sweden,” in Ann Danaiya Usher (ed), Dams as Aid: A political anatomy of Nordic development thinking (London: Routledge, 1997, pp. 23-24. In a 1990 assessment of 372 Norwegian fish ladders, only about one-third were functioning well and the remainder were either not functioning at all, or functioning very poorly due to a lack of maintenance. O.K. Berg and K.O. Myhre, “Fish ladders and conservation of fish populations,” DN-notat 4, 1990, pp. 1-39, cited in John E. Brittain and Jan Henning L’Abée-Lund, “The environmental effects of dams and strategies for reducing their impact,” from proceedings of the ICOLD Symposium “Reservoirs in River Basin Development,” Oslo, Norway, July 6, 1995, p. 131.

Norwegian scientists recognize that hydro development has contributed to the extinction of the Atlantic salmon, Norway’s most economically valuable fish species, in 91 river systems. Jon Atle Eie, John E. Brittain, and Jon Arne Eie, “The biodiversity of lakes and rivers,” in “Biotope Adjustment Measures in Norwegian Watercourses,” Norwegian Water Resources and Energy Directorate, Oslo, 1993, p.12.

To compensate for the loss of spawning and rearing grounds, Nordic power companies have often been ordered to stock the dammed watercourse with fish, such as brown trout or Atlantic salmon. But stocking has introduced fish diseases, parasites, and weakened the genetic makeup of indigenous fish populations. Eie, Brittain, and Eie, 1993, p. 29. Since the late 1980s, fisheries authorities have placed more emphasis on improving the natural habitat for fish, rather than stocking (i.e., introducing large rocks, improving water flows, creating natural cover, and building side channels for spawning and juvenile habitat). I. Näslund, “Effects of habitat improvement on the brown trout, Salmo trutta L., population of a northern Swedish stream,” Aquaculture and Fisheries Management, 1989, pp. 463-474 cited in Brittain and Henning, 1995, p. 134.

31. Asian Development Bank Aide Memoir, November 1998.

32. Lao PDR Ministry of Industry and Handicraft, Theun-Hinboun Power Project Summary Environmental Impact Assessment Report, 1994, p.7-1.

33. Asian Development Bank Aide Memoir, November 1998.

34. ADB loan agreement, October 1994.

35. The Water and Water Resources Law, adopted by the National Assembly October 11, 1996, effective March 3, 1997, an unofficial translation by Dirksen Flipse Doran & Le, Vientiane, Lao PDR.

36. The Electricity Law, adopted by the National Assembly April 12, 1997, effective August 29, 1997, an unofficial translation by Dirksen Flipse Doran & Le, Vientiane, Lao PDR. The water and electricity laws were passed in 1997 after consultations with Norway’s electricity regulator, the Norwegian Water Resources and Energy Directorate, which were paid for by NORAD (Correspondence from Bjorn Wold, NVE, to Gráinne Ryder, Probe International, August 17, 1999).

37. For more details about dam-building trends in Nordic countries, see Lars Lövgren, “Moratorium in Sweden,” Maria Vedin, “The Dams Inside,” and Oystein Dalland, “The Last Big Dam in Norway,” in Ann Danaiya Usher (ed), Dams as Aid: A political anatomy of Nordic development thinking (London: Routledge, 1997); Juliette Majot (ed), “Case Study: Norway,” Beyond Big Dams: A New Approach to Energy Sector and Watershed Planning (Berkeley: International Rivers Network, 1997), pp. 101-108.

38. Anthony A. Churchill, “Meeting Hydro’s Financing, Development Challenges,” HRW, 1997.

39. “R & D Program for Improvement in the Norwegian Hydropower System,” International Water Power & Dam Construction, June 1992, in Juliette Majot, 1997, p. 106.

40. Patricia Adams, “Investment Criteria to Assure Sustainable Development,” Witness Statement of Patricia Adams, Probe International, to an Ontario Energy Board public hearing to examine and report on certain matters relating to Ontario Hydro International Inc., November 22, 1994. See also World Commission on Sustainable Development, Our Common Future (Oxford: Oxford University Press, 1987).

41. Elizabeth Brubaker, “Protecting Communities and Individuals When Siting a Nuclear Waste Disposal Facility: Part III of Energy Probe’s Submission to the Nuclear Fuel Waste Environmental Assessment Panel,” Submitted to Nuclear Fuel Waste Management and Disposal Concept Review, Canadian Environmental Assessment Agency, February 28, 1996, pp. 24.

APPENDIX

42. The author is indebted to Svein Batvik, a senior advisor at Norway’s Directorate for Nature Management, for explaining the legal and regulatory framework for hydropower producers in Norway.

43. Last year, the regional court of Norway ordered Statkraft to pay the Alta Salmon Fisheries Organization approximately $16,000 for economic damages incurred between 1987 and 1996, and $68,000 annually from 1997 onward. Correspondence from Geir Fugsleth, Statkraft, to Gráinne Ryder, Probe International, August 10, 1999.

44. Knut Gakkestad, “The Licensing Procedures for Hydro Power Development in Norway, Norwegian Water Resources and Energy Directorate, Oslo, May 1, 1997.

45. For more information about the Norwegian Water Resources and Energy Directorate (NVE), see http://www.webben.nve.no/english

For more information e-mail: Gráinne Ryder

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